Wal-Mart plans to sell new drink machine: report

By IBT Staff Reporter On 01/26/12 AT 4:32 PM

Wal-Mart Stores Inc plans to start selling a new single-serve beverage maker, according to an analyst report on Thursday, sending shares of rival coffee system maker Green Mountain Coffee Roasters Inc down more than 4 percent.

The introduction of the Esio Beverage System, with its relatively inexpensive drinks, could pressure the price that Green Mountain, the dominant player in the U.S. single-serve coffee market, can charge for its K-Cups, which are the portions of coffee used in its brewers, the report said.

Wal-Mart, the world's biggest retailer, has plans to begin selling the Esio System, which can make single servings of hot and cold drinks including coffee, tea, energy drinks and vitamin waters, according to a report by research firm Detwiler Fenton.

That machine's presence at Walmart stores would provide more competition for Keurig as well as for Kraft Foods Inc's Tassimo and Nestle's Nescafe Dolce Gusto, the report said.

Prices per serving are expected to be much lower than the average cost of Keurig's K-Cups, which range from 60 cents to 90 cents each, the report said.

We believe that this introduction will likely be a game changer in the single-serve category, Detwiler said in the report, adding that Walmart had been frustrated with Green Mountain's pricing, which was considered too high for the Walmart consumer.

We see this introduction as fulfilling Walmart's goal of offering a competitive value option, the report said.

Officials at Wal-Mart, Green Mountain and Esio were not immediately available to comment.

News of the report was first mentioned by a CNBC business news correspondent.

Green Mountain's shares were down 4 percent at $49.17 on the Nasdaq on Thursday afternoon. Shares of Sodastream International , which also makes home beverage machines, were down 3 percent at $37.23.

(Reporting By Martinne Geller in New York; editing by Matthew Lewis, Bernard Orr)